formulas

• Revenue (Sales or Turnover)

  Selling price per unit × Number of units sold
• Variable costs (Total variable costs)

  Variable cost per unit × Number of units sold
• Total costs


  Fixed costs + Variable costs
• Profit


  Total revenue − Total costs OR Total contribution − Fixed costs
• Market capitalisation of a business


  Number of issued shares × Current share price
• Expected value of a decision with two possible outcomes

  Pay-off of A × probability of A + Pay-off of B × probability of B
• Net gain


  Expected value − Initial cost of decision
• Market growth (%)


  Change in the size of the market over a period / Original size of the market × 100
• Market share (%)


  Sales of one product OR brand OR business / Total sales in the market × 100
• Added value


  Sales revenue − costs of bought-in goods and services
• Labour productivity


  Output over a time period / Number of employees
• Unit costs (average costs)


  Total costs / Number of units of output
• Capacity utilisation (%)


  Actual output / Maximum possible output × 100
• Return on investment (%)


  Profit from the investment (£) / Cost of the investment (£) × 100
• Gross Profit


  Revenue − Cost of Sales
• Profit from Operations = Operating profit

  Gross profit − Operating Expenses
• Profit for year


  Operating profit + Profit from other activities − Net finance costs − Tax
• Gross profit margin (%)

  Gross profit / Revenue × 100
• Profit from operations margin = Operating profit margin (%)


  Operating profit / Revenue × 100
• Profit for year margin (%)


  Profit for year / Revenue × 100
• Variance


  Budgeted figure – actual figure
• Contribution per unit


  Selling price − Variable costs per unit
• Total contribution


  Contribution per unit × Units sold OR Total revenue − Total variable costs
• Break-even output


  Fixed costs / Contribution per unit
• Margin of safety


  Actual level of output − Break-even level of output
• Labour turnover (%)


  Number of staff leaving / Number of staff employed by the business × 100
• Employee retention rate (%) for a particular time period

  Number of employees who remained with the business for the whole period of time / Number of employees at start of the time period ×100
• Employee costs as percentage of turnover


  Employee costs / Turnover × 100
• Labour cost per unit

  Labour costs / Units of output
• Return on capital employed (ROCE)(%)


  Operating profit / Total equity + non-current liabilities × 100
• Current ratio


  Current assets / Current liabilities
• Gearing (%)

  Non-current liabilities / Total equity + non-current liabilities ×100
• Payables days


  Payables / Cost of sales × 365
• Receivables days


  Receivables / Revenue × 365
• Inventory turnover


  Cost of sales / Average inventories held
• Average rate of return (%)

  Average annual return (£) / Initial cost of project (£) × 100
• Reorder Level = Average Daily Usage×Lead Time